Yesterday, the Paul-Grayson Amendment “was approved by the House Finance Committee with an overwhelming and bipartisan 43-26 vote on Thursday afternoon despite harried last-minute lobbying from top Fed officials and the surprise opposition of Chairman Barney Frank (D-Mass.), who had previously been a supporter.” As reported by Ryan Grim @ Huffington Post:

The measure, cosponsored by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.), authorizes the Government Accountability Office to conduct a wide-ranging audit of the Fed’s opaque deals with foreign central banks and major U.S. financial institutions. The Fed has never had a real audit in its history and little is known of what it does with the trillions of dollars at its disposal. […]

A desperate, last-minute attempt to thwart the move came in the form of an amendment championed by Rep. Mel Watt (D-N.C.) and described by its supporters as more reasonable. On Tuesday, however, the Huffington Post reported that, on a close reading, his amendment would in fact decrease transparency at the Fed by adding additional restrictions.

Backers of the Watt amendment pressed their case on Wednesday by sending a letter from a “political cross section of prominent economists” backing a measure like Watt’s. HuffPost reported, however, that those economists might well have be prominent, but they certainly aren’t a “political cross section.” Seven of the eight economists in question have extensive connections to the Fed — and half of them are currently on the Fed payroll. Those affiliations were not noted in the letter.

In response to the Watt Amendment letter, Jane Hamsher of Firedoglake generated a letter of her own to garner progressive support for the Paul-Grayson Amendment:

Despite the vocal opposition of Chairman Barney Frank and the fierce lobbying on the part of the central bank itself, 15 Democrats bucked leadership and the measure passed. According to the Huffington Post, “Key to winning Democratic support was a letter posted early Thursday from labor leaders and progressive economists” which was “organized by the liberal blog Firedoglake…Grayson was able to show Democratic colleagues that the liberal base was behind them.” During the committee debate, Grayson quoted from the letter.

Here Grayson explains the significance of the Paul-Grayson Amendment, and why he rejected the alternative, watered-down, Watt Amendment: